Will there be a shortage of CPAs?

Should the accounting profession be concerned because the number of accounting graduates has declined over the past several years? By the year 2000, nearly all jurisdictions will require 150 semester hours of college education to take the CPA examination and be licensed. Will those factors combine and cause a shortage of new CPAs? A look at the number and types of students who will be attending college during the next 20 years and their attitudes about the profession provides some interesting answers.

Accounting degrees 1990-2010

The number of high school graduates has been falling for the past several years, but that decline will stop in 1992. By 2000, 12% more students will graduate from high schools than do today and those numbers will continue to grow well into the 21st century.

During 1990, universities will award just over 1,300,000 bachelor's and master's degrees. This number will decline by about 2% by 1998 and then climb slowly through the early years of the next century. Thus, there will be an ample number of people attending college, but that doesn't mean they will major in accounting.

The attitude of today's freshmen is a key indicator of the future supply of accountants. The news on that front is very good. During the fall of 1989, the American Council of Education (ACE), an organization of university administrators, surveyed 216,000 college freshmen. Accounting was the second choice out of 80 probable majors, chosen by 6.1% of freshmen. Business, the first choice, was chosen 6.5% of the time. These results belie the notion that accounting is an unknown or unattractive profession.

Impact of the 150-hour requirement

The 150-hour education requirement is not expected to deter many students from pursuing an accounting degree and will attract brighter students to the profession. The ACE study found a surprising 60% of freshmen intended to obtain graduate degrees.

As the 150-hour requirement goes into effect, an increasing proportion of new accounting graduates will hold graduate degrees. At the same time, employers--particularly major public accounting firms--will continue to hire large numbers of students with only baccalaureate degrees. Because there will be plenty of good jobs available, the total number of accounting degrees awarded is expected to remain constant at the current 45,000 annually.

How many new CPAs?

By the year 2000, the number of people sitting for the CPA exam will have dropped dramatically from the ] current 145,000 per year. However, because candidates will be much better prepared, the passing rate will have climbed sharply, resulting in 20,000 to 30,000 people passing all parts of the exam they attempt. Most of those will complete the other state certification requirements and become CPAs. In Florida, where the 150-hour requirement became effective in 1984, the rate of passing all the exam's parts has been consistently 40% to 50% higher than 10 years earlier.

States license CPAs to protect the public from incompetent and unscrupulous people who might attest to financial statements. Most of the roughly 400,000 CPAs in the United States do work that does not require state licensure. In the strictest sense, very few new CPAs are required each year. An added 20,000 to 30,000 new CPAs each year seems sufficient to protect the public and maintain the profession's vitality.

The "typical" CPA?

New CPAs of the next 20 years will have characteristics noticeably different from those of their peers of a generation earlier. Beginning in the early 1970s, more and more women began to pursue accounting degrees and by 1986 they had matched the number of male graduates.

The average new CPAs of the 21st century will be older and have more business experience and more education than those of the 1970s and 1980s. They will insist on and be capable of more job responsibility early in their careers. Employers will adjust traditional assignments and training to move these people much more rapidly into productive supervisory roles.

The needs of staff members from two-income households will force CPA firms to consider seriously employee benefits unheard of 20 years ago. Flextime, day care and maternity leave will increase in importance for most businesses--particularly CPA firms.

Starting salaries for new CPAs will be higher than they are today. The extra cost will be more than returned in increased productivity, at least for employers who take advantage of these more capable new CPAs. Higher starting salaries also will attract more bright people to study accounting and become CPAs.

Adjustments needed

There will be enough new CPAs during the next 20 years to supply the needs of the profession. The challenge for employers will lie in adjusting advancement, training, compensation and benefits programs to accommodate the new CPA.

Rick Elam, CPA, PhD, is vice-president--education at the American Institute of CPAs.

Dr. Elam is an employee of the American Institute of CPAs and his views, as expressed in this article, do not necessarily reflect the views of the AICPA. Official positions are determined through certain specific committee procedures, due process and deliberation.